With savings account interest rates at an all-time low and consumer savings boosted by multiple lockdowns, peer-to-peer lending platforms have a big opportunity to attract Innovative Finance ISA (IFISA) money this tax year.
This brings two questions to the fore. Firstly, will platforms market their IFISAs outside of ISA season? And secondly, will this spell a change in marketing strategies?
Neil Faulkner, managing director of P2P research firm 4th Way, said there is much to be said for targeting new investors outside of ISA season.
“The off-season lasts nine months, so providers needn’t wait that long for their next burst of growth,” he said.
Since the start of the pandemic, Faulkner noted that people are saving and investing more – and he suspects the threat of rising inflation will lure more people away from savings accounts into IFISAs.
While the opportunity is there, Paul Sonabend, executive chairman of Relendex, highlighted the challenges associated with targeting new investors via advertising, after stricter marketing restrictions were introduced in December 2019.
“The comparison sites are outrageously expensive [for pay per clicks] if you can’t convert 90 per cent of the leads,” Sonabend added.
Meanwhile, a Folk2Folk spokesperson questioned the benefits of offering incentives to new IFISA investors.
“We do not feel the need to entice investors with cashback or similar incentives as our IFISA product is attractive in its own right, offering 6.5 per cent per annum tax-free,” the spokesperson said.
Her sentiments were echoed by a spokesperson for Crowdstacker, who said the P2P lender is not planning to change its IFISA marketing strategy this year.
“All of the loans that we feature on our platform are ISA eligible so we always let our investors know how they can invest tax-efficiently regardless of whether it is in the run-up to the start or end of the tax year,” the spokesperson said.